The top federal income tax rate has changed dramatically across presidencies
The highest federal income tax rate in U.S. history was 94 percent, set during World War II under President Franklin D. Roosevelt. The rate stayed at or near that level through the end of Roosevelt's presidency in 1945 and into Harry Truman's administration, dropping to 91 percent by 1946. These rates applied only to the highest earners — the 94 percent rate kicked in on income above roughly $200,000 in 1944 dollars, which is equivalent to several million dollars today.
After World War II ended, the top rate gradually declined under successive presidents. By the time Ronald Reagan took office in 1981, the top rate was 70 percent. Reagan's administration pushed through significant tax cuts, and by 1988 the top rate had fallen to 28 percent — the lowest it had been since before the Great Depression. Subsequent presidents have adjusted rates up and down, but none have approached the wartime highs of the 1940s.
Key Takeaways
- The 94 percent top tax rate under Franklin D. Roosevelt during World War II remains the highest in U.S. history, applying only to income above roughly $200,000 in 1944 dollars.
- Tax rates are set by Congress through legislation, not by presidents acting alone, though presidents can propose changes and sign bills into law.
- The top rate was 91 percent when Dwight Eisenhower took office in 1953 and remained there through most of his presidency.
- Ronald Reagan's administration achieved the largest reduction in the top rate in modern history, cutting it from 70 percent in 1981 to 28 percent by 1988.
- Current top rates and historical rates apply only to the highest income brackets; most taxpayers pay substantially lower rates on their income.
Why wartime rates were so high
The 94 percent top rate during World War II was not primarily a policy choice about income distribution — it was a revenue mechanism to fund military spending. The federal government needed enormous sums to finance the war effort, and raising the top rate on the highest earners was politically easier than raising rates across the board or cutting spending. The rate applied to such a small number of people that it affected relatively few households, even though it generated significant revenue from those households.
The 91 percent rate that persisted through the 1950s under President Eisenhower was a carryover from the war years. Eisenhower did not push to lower it significantly during his presidency, despite being a Republican. The rate remained at 91 percent throughout his two terms, from 1953 to 1961.
How tax rates changed from Kennedy through Reagan
President John F. Kennedy proposed cutting the top rate from 91 percent to 65 percent in 1961, arguing that lower rates would stimulate economic growth. Congress passed the cut in 1964, after Kennedy's assassination, and the top rate dropped to 70 percent. That 70 percent rate remained in place through the 1970s under Presidents Lyndon Johnson, Richard Nixon, Gerald Ford, and Jimmy Carter.
Ronald Reagan campaigned on significant tax cuts and made them a centerpiece of his first term. The Economic Recovery Tax Act of 1981 cut the top rate from 70 percent to 50 percent immediately. The Tax Reform Act of 1986 cut it further, to 28 percent by 1988. These cuts were the most dramatic reduction in the top rate since the end of World War II. Reagan's successor, George H.W. Bush, agreed to raise the top rate to 31 percent in 1990 as part of a budget deal, despite his "read my lips, no new taxes" campaign promise.
Tax rates since 1990
The top rate has fluctuated between 31 and 39.6 percent since 1990. President Bill Clinton raised it to 39.6 percent in 1993. George W. Bush cut it to 35 percent in 2001 through the Economic Growth and Tax Relief Reconciliation Act. Barack Obama allowed those cuts to expire for high earners in 2013, raising the top rate back to 39.6 percent. Donald Trump's Tax Cuts and Jobs Act of 2017 lowered it to 37 percent, where it remained through his presidency.
These modern rates are substantially lower than the historical highs but higher than the 28 percent floor reached in 1988. The rates apply to different income thresholds depending on filing status — for 2024, the 37 percent rate applies to income above $578,100 for single filers and $693,750 for married couples filing jointly, though these thresholds adjust annually for inflation.
Congress sets tax rates, not the president
It is important to understand that Congress, not the president, has the constitutional power to set tax rates. The president can propose tax changes and sign or veto legislation, but the House and Senate must pass any tax bill. When people refer to "Reagan's tax cuts" or "Clinton's tax increase," they are using shorthand for legislation that Congress passed and the president signed.
This means that the highest tax rate under any given president reflects both the president's priorities and the composition and priorities of Congress at that time. A president who wanted to raise taxes might not be able to do so if Congress opposed it, and vice versa. The 94 percent rate under Roosevelt was set by Congress during wartime when there was broad agreement that revenue was needed for military spending.
How historical rates compare to today
| Period | Top Federal Rate | President(s) |
|---|---|---|
| 1944–1945 | 94% | Franklin D. Roosevelt |
| 1946–1950 | 91% | Harry Truman |
| 1953–1961 | 91% | Dwight Eisenhower |
| 1964–1980 | 70% | Kennedy, Johnson, Nixon, Ford, Carter |
| 1981–1986 | 50% (then declining) | Ronald Reagan |
| 1988–1992 | 28%–31% | Ronald Reagan, George H.W. Bush |
| 1993–2000 | 39.6% | Bill Clinton |
| 2001–2012 | 35% | George W. Bush |
| 2013–2016 | 39.6% | Barack Obama |
| 2017–2020 | 37% | Donald Trump |
| 2021–present | 37% | Joe Biden |
What these rates actually meant for taxpayers
A common misunderstanding is that a 94 percent top rate meant that everyone paid 94 percent of their income in federal tax. That is not how tax brackets work. The U.S. uses a progressive tax system where different portions of income are taxed at different rates. A person earning $300,000 in 1944 would not pay 94 percent on all of it — they would pay lower rates on the first portions of income and only pay 94 percent on the amount above the threshold where that rate began.
Even so, the effective tax rate (the actual percentage of total income paid in federal tax) for the highest earners was substantially higher in the 1940s and 1950s than it is today. A high earner in 1950 might have paid an effective rate of 50 percent or more, while a high earner today with the 37 percent top rate typically pays an effective rate in the mid-to-high 20s or low 30s, depending on deductions and credits.
Frequently Asked Questions
Did the 94 percent tax rate actually collect that much money?
The 94 percent rate generated significant revenue, but the amount was smaller than the rate alone suggests because so few people earned income high enough to be subject to it. During World War II, the vast majority of taxpayers paid rates well below 94 percent. The rate was effective as a revenue tool because it captured a large share of income from the highest earners, even though it applied to a tiny portion of the population.
Why did Reagan cut taxes so much more than other presidents?
Reagan made tax cuts a central campaign promise and had Republican control of the Senate during his first term, which gave him the political power to pass major legislation. The 70 percent top rate in 1981 was also unusually high by modern standards, so there was room to cut significantly. Other presidents have proposed smaller cuts or faced opposition from Congress that limited how much they could reduce rates.
Could the top tax rate go back to 70 or 90 percent?
Yes, Congress could raise the top rate to any level it chose, but doing so would require legislation that both chambers pass and the president signs. There is no legal maximum or minimum for the top rate. Whether such an increase would happen depends on what voters and their elected representatives decide about tax policy, which changes over time.
Are there other taxes besides the federal income tax?
Yes. High earners also pay federal payroll taxes (Social Security and Medicare), state and local income taxes, capital gains taxes, and other taxes depending on the type of income and where they live. The federal income tax rate is only one piece of the total tax burden. Some states have no income tax, while others have rates as high as 13 percent.